WGU C213 ACCOUNTING FOR
DECISION MAKERS COMPREHENSIVE
EXAM
1. Which of the following best describes the core objective of financial accounting?
A. To provide internal managers with detailed reports for daily operational decisions.
B. To minimize the tax liability of a corporation through aggressive accounting strategies.
C. To provide external stakeholders with useful information for making investment and
credit decisions.
D. To track the specific physical movement of inventory within a warehouse.
Answer: C
Conceptual Explanation: Financial accounting is primarily focused on providing
information to external users, such as investors and creditors, whereas managerial
accounting focuses on internal users.
2. Under the accrual basis of accounting, when is revenue generally recognized?
A. When cash is received from the customer.
B. When the contract is signed by both parties.
,C. When the performance obligation is satisfied, regardless of when cash is received.
D. At the end of the fiscal year for all services rendered during the year.
Answer: C
Conceptual Explanation: The revenue recognition principle states that revenue is
recognized when the performance obligation is satisfied (goods delivered or services
performed), not necessarily when cash is received.
3. If a company uses the Double-Declining Balance method for a $100,000 asset with a 5-year
life and $10,000 salvage value, what is the depreciation expense for Year 1?
A. $20,000
B. $18,000
C. $36,000
D. $40,000
Answer: D
Conceptual Explanation: Double-declining rate is 2 / useful life (2/5 = 40%). Year 1
depreciation = Book Value ($100,000) * 40% = $40,000. Salvage value is not subtracted for
the DDB calculation until the end.
4. Which financial statement reports the financial position of a company at a specific point in
time?
A. Income Statement
, B. Statement of Retained Earnings
C. Statement of Cash Flows
D. Balance Sheet
Answer: D
Conceptual Explanation: The Balance Sheet provides a ‘snapshot’ of a company’s assets,
liabilities, and equity at a specific date, unlike the other statements which cover a period of
time.
5. In a period of rising prices (inflation), which inventory cost flow assumption results in the
lowest Net Income?
A. FIFO (First-In, First-Out)
B. LIFO (Last-In, First-Out)
C. Weighted Average Cost
D. Specific Identification
Answer: B
Conceptual Explanation: In inflationary periods, LIFO assigns the most recent (higher)
costs to Cost of Goods Sold, resulting in lower Net Income and lower taxes.
6. What is the impact on the accounting equation when a company purchases equipment by
paying 20% in cash and signing a note for the remainder?
A. Assets decrease, Liabilities increase, Equity decreases.
DECISION MAKERS COMPREHENSIVE
EXAM
1. Which of the following best describes the core objective of financial accounting?
A. To provide internal managers with detailed reports for daily operational decisions.
B. To minimize the tax liability of a corporation through aggressive accounting strategies.
C. To provide external stakeholders with useful information for making investment and
credit decisions.
D. To track the specific physical movement of inventory within a warehouse.
Answer: C
Conceptual Explanation: Financial accounting is primarily focused on providing
information to external users, such as investors and creditors, whereas managerial
accounting focuses on internal users.
2. Under the accrual basis of accounting, when is revenue generally recognized?
A. When cash is received from the customer.
B. When the contract is signed by both parties.
,C. When the performance obligation is satisfied, regardless of when cash is received.
D. At the end of the fiscal year for all services rendered during the year.
Answer: C
Conceptual Explanation: The revenue recognition principle states that revenue is
recognized when the performance obligation is satisfied (goods delivered or services
performed), not necessarily when cash is received.
3. If a company uses the Double-Declining Balance method for a $100,000 asset with a 5-year
life and $10,000 salvage value, what is the depreciation expense for Year 1?
A. $20,000
B. $18,000
C. $36,000
D. $40,000
Answer: D
Conceptual Explanation: Double-declining rate is 2 / useful life (2/5 = 40%). Year 1
depreciation = Book Value ($100,000) * 40% = $40,000. Salvage value is not subtracted for
the DDB calculation until the end.
4. Which financial statement reports the financial position of a company at a specific point in
time?
A. Income Statement
, B. Statement of Retained Earnings
C. Statement of Cash Flows
D. Balance Sheet
Answer: D
Conceptual Explanation: The Balance Sheet provides a ‘snapshot’ of a company’s assets,
liabilities, and equity at a specific date, unlike the other statements which cover a period of
time.
5. In a period of rising prices (inflation), which inventory cost flow assumption results in the
lowest Net Income?
A. FIFO (First-In, First-Out)
B. LIFO (Last-In, First-Out)
C. Weighted Average Cost
D. Specific Identification
Answer: B
Conceptual Explanation: In inflationary periods, LIFO assigns the most recent (higher)
costs to Cost of Goods Sold, resulting in lower Net Income and lower taxes.
6. What is the impact on the accounting equation when a company purchases equipment by
paying 20% in cash and signing a note for the remainder?
A. Assets decrease, Liabilities increase, Equity decreases.
